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at’s the best way to quickly improve innovation in your organization? That was the question posed to me recently by Warwick, the head of innovation for the Australia and New Zealand region of a multinational engineering firm. He asked because their CEO had just announced a new innovation initiative. It’s an idea contest – submit your ideas, and the person that submits the best one wins $10,000. If you think about this for a minute, you can see a few assumptions about innovation that underlie this contest: #The main problem the firm has with innovation is that they don’t have enough ideas. #The reason that people aren’t innovating is that they aren’t being paid enough to do so. #Idea generation is the best place to invest money to improve innovation. All three of these assumptions are false, and that is why this initiative isn’t going to work. This is the most common innovation mistake that I see: acting like innovation is all about generating new ideas. Innovation is the process of idea management – so, yes, you need great ideas to innovate, but that is only part of it. You also need to be able to select ideas. Once you’ve done that, you need the ability to execute them. While all this is going on, you have to keep people inside your organization enthusiastic about the ideas. And at the end of all of this, you have to get your great new idea to spread. To innovate, you need to be good at all of these things. Morten Hansen and Julian Birkinshaw refer to this process as the Innovation Value Chain, and they say that to innovate successfully, you need to be good at all of these steps. Over the past five years, I have had all of my MBA and Executive Education students evaluate the Innovation Value Chain within their organizations. Over that time they have analyzed the innovation capability of more than 300 organizations. They cover the full spectrum – large multinationals and tiny start-ups; for-profit, not-for-profit and NGOs; private sector, government units and university sections. Out of all of these organizations, only about 10 are idea-poor. That’s less than 4%. The other 96% of organizations have problems with other parts of the innovation process. So the first assumption of Warwick’s CEO is wrong. We know that there are actually plenty of good ideas in the firm – the bigger issue is figuring out how to sort them out and get them executed. The second assumption is just as wrong. The CEO is assuming that the best way to motivate innovative people is with money. This is a bad approach to take with innovation and other creative work. Dan Pink does a great job of summarizing the research on this in his book Drive. The research shows that to motivate work built on creativity, people need autonomy, mastery and purpose. The problem here is that it is a lot easier to offer a $10,000 prize than it is to design work so that people have autonomy, mastery and purpose. That requires an entirely new approach to management for most organizations. This is why many innovation initiatives fail – managers simply try to bolt an innovation initiative onto an existing business model that is ill-suited to innovating. If you want to start thinking about how to make changes in this area, answer this question: what would I do differently if everyone reporting to me were a volunteer? The third assumption is also wrong. This follows from the discussion of the first assumption. If innovation is a process, and most firms are weakest in activities other than idea generation, than it should be clear that the most sensible place to invest money is in the area where you’re weakest. So why do organizations focus on improving idea generation, when this is almost never the problem? Because idea generation is the easy part! It’s the one area where you can show measurable improvement almost immediately. But if your main weakness is idea selection, or idea execution, then generating more ideas won’t help. In fact, generating more ideas can actually make you less innovative, because the weaknesses in other parts of the process will sink the new efforts, which in turn increases the frustration of your people – demotivating them. So what should Warwick’s CEO do? The first thing that I would recommend is evaluating the firm’s innovation strengths and weaknesses. The Hansen and Birkinshaw article includes a quiz for this, but there is an even better version available in the Australian Public Sector Innovation Report. The assessment will indicate which part of the process is the weak link in the chain. Once this weakness is identified, take the $10,000 and invest it in improving that part of the process. It will likely involve making genuine changes in the way things are managed. But it will lead to genuine improvement too. After six months or a year, run the assessment again to see if things are better. If they are, start working on the next weakest link in the chain. Over time, innovation really will improve. I wonder if I could submit that idea into the contest?